In this episode of Benevity's Social Impact Show, we chat with our Head of ESG Strategy Stewart Rassier and Head of Communications Strategy Janna Irons to explore how to develop an ESG strategy. This includes securing leadership buy-in, aligning goals and reporting, and engaging employees.

You can listen to the full episode on Spotify, Apple, or Amazon Music. You can also watch the interview on YouTube. Find the full transcription below — we hope you enjoy!

Karl Yeh:        

So this is part two of our three part discussion on ESG. I'm joined by two special guests today.

My first guest, her name is Janna Irons, who [00:00:30] is the Head of Communication Strategy with thinkPARALLAX. And my second guest is Stewart Rassier, who is the Head of ESG strategy with thinkPARALLAX. So, let's go right into ESG strategy.

How would you go about developing an ESG strategy within your organization and maybe let's start it with your organization is just getting started.

How would you go about developing that plan?

How to develop an ESG strategy

Stewart Rassier:          

One of the things that is essential is to establish a baseline, or an understanding, of what are you doing today, right?

So, what programs, what policies, what metrics do I have in place presently that meet some of the expectations for ESG.

So that could be things around health and safety; it could be around environmental performance and energy use. It could be around diversity, equity, inclusion, training and development. The reality is, is we're probably doing some of it or a lot of it already. We're just calling it something different.

So, the first piece to that would be to just understand where you are and do a baseline. The second thing you probably want to do and that is understand what your peers are doing.

So, some type of web research, talking to some colleagues in the space to understand what your colleagues and peers are doing would be a second step for this.

Related to that is, there's a lot of us that have done the work, or you have other companies that have done the light work and we can learn from their failures and their successes.

So, participating in conferences, there's different webinars that you can get into that I think can be particularly helpful.

And that's really going to provide you with a baseline for moving forward.

As far as implementation, things to consider and put together, I think one of the first steps to help ignite... ESG strategy is to actually do an ESG or CSR social impact report.

It becomes a very tangible thing that you're trying to produce that then helps you push to answer questions around, right?

1. Why are we doing ESG?
2. What policies do I have in place?
3. What programs do we have?
4. What metrics do I have?
5. And then finally, how am I going to talk about and communicate that?

Karl Yeh:                    

Actually I want to go a little bit back, and how would you go about setting, I guess, your ESG goals? Is this something that you would maybe town hall with a steering committee? Would you just set it with your leadership team? How would you go about setting this?

How to develop and get buy in for company-wide ESG goals

Stewart Rassier:          

I think there's a handful of strategies. A lot will depend on your organization. For some of them, there might be some preconceived expectations for things that need to happen. Usually, the need or the interest in creating an ESG strategy doesn't happen in a vacuum. Usually, there's some type of catalyst for it.

It could be an investor call, or it could have been a movement within employees to expect to have that as something they want. So I think, what goals you prioritize or how you create them varies a little bit on what is the genesis of the project? I know that's a little roundabout answer to it, but I think that's part of it.

And then, I think once you have a little bit more clarity on what's important, why's it important, I like to almost work backwards and try and figure out, "So what impact do we want to have? What change do you want to create, whether within the environmental social governance space?" And then work backwards from there.

So, in three to five years, we want to have a particular score on an ISS rankings and ratings type thing, or we want to be on the Dow Jones Sustainability Index, or we want to get recognized as the best places to work.

And then, that helps solidify some of the specific goals that we want to have. And then, work backwards from there on what would be the milestones and steps to get there.

Creating goals based on level of ambition, stakeholders and business goals

Janna Irons:                

Yeah. And I'll add that, not all companies endeavor to be leaders, right? Some of them are fine to jus be middle of the pack.

So for them, it's doing a benchmark assessment of what their peers are doing and figuring out then where they need to sit in order to figure out where they want to be five years from now. So I think, really it's a unique path for different clients, whether companies want to really put a stake in the ground on particular topics. Maybe they really want to have a bold goal around climate, because that's really material to their business and their stakeholders, versus wanting to lead on everything. And so, crafting their goals based on their level of ambition, as well as their goals for their stakeholders, as well as their business as a whole.

Stewart Rassier:          

Right, sometimes the goal is to be middle of the pack. Sometimes, quite honestly, Karl, even how you frame it, like first thing....a lot of companies that I've worked don't actually have goals in the beginning. It's more about just start getting the information out there and just understanding what it is and what our process is in place.

And, setting goals is often a year-two or year-three project for the team. And the first year, I'm just trying to figure out where are all these squirrels are running around my organization to have my ESG data? And, my only goal is really just to get all of the info and all the internal stakeholders together. And to make sense of what we're doing and how we're doing it.

Then, once I have that, my goal is essentially to have the baseline. And, from there, then I can start thinking a little bit more strategically and setting goals.

Karl Yeh:                      

And actually, we talked about this in the last episode, where getting buy-in. So, where does getting buy-in from your leadership fit when you're developing a strategy?

Where does getting leadership buy-in fit?

Janna Irons:                  

All throughout.

Stewart Rassier:          

Yeah, all throughout. I think, in my experience, you can do ESG okay without a senior sponsor that's actively involved.

But those that have buy-in commitment, and if it's not being led by the senior leader, at least they have an ear to the senior leader, those are where we see the most success, right?

Then it's not necessarily the senior leader is doing the day-to-day work, but if the primary contact driving strategy or the primary person driving the report knows that her boss is there and can elevate when needed, that's key.

So I think, being very clear as to who has this senior ownership. And, that is really defining as if it's not a direct line to the CEO, at least it's a one degree of separation from the CEO is key in all of this.

Janna Irons:                

And I think we've also really found it's effective at the start to include them in conversations, include leaders to share with us their ambition for their area of the business, and really hear from them what they're already doing and where they want to go, and be able to build that into the strategy, and include them along the way where possible, so that they have ownership over of it.

So that later on, when the strategy is launched, it doesn't feel like something new is being pressed upon them, but that they were part of creating.

Stewart Rassier:          

And, the last thought on the senior leader and sponsors is understanding where they fit within the organization and what their day job is. Often, it's not ESG specific, or there's only a handful of companies that have a chief sustainability officer. So, if your senior leader is in HR, there's certain metrics, there's certain outcomes or expectations they have for ESG and framing it up more around attracting and retaining talent, will be thinking more about human capital as a priority for my strategy.

If I'm laddering up to legal, the tone of the strategy, the tone of my communications might be different, because they have more of a legal mindset. I might be thinking a little bit more about the auditing process for my report. If I'm laddering up to the chief marketing officer, I'm thinking about making it splashy, I'm thinking about other external communications offerings. If I'm laddering up to investor relations, I'm thinking about some of these investor requests. I'm thinking about stakeholder... Or sorry, your shareholders and proxies that are coming in.

So, understanding who your senior sponsor is and what's important to her/him is going to be key as well as I put my strategy together.

Karl Yeh:                      

Now, in addition to leaders... Well, leaders and executives, obviously, the second part of the buy-in is the employees too. How would you go about leveraging the employees in your ESG programs?

How to get employees involved in your ESG strategy

Janna Irons:                

I'd say. it really starts with being able to package what you're doing in a way that's easy to tell the story to, right? So you have these topics that you figured out are the most important for your company to be focusing on.

You're starting to set goals, or figure out programs, or policies around those. And then you have to figure out a way to turn all of that into something that you can share easily, right? So, we call that ESG communication platform, but it's really just a way to tell that story in a really short, comprehensive way.

And so, being able to start there, and that's a really great tool to be able to share with employees at all levels.

How will the ESG strategy benefit employees

And then I think it's really about finding the, "What's in it for me?" For employees, right? There's this big, broad story of what the company's doing and that can help instill pride or purpose for someone working at the company, but you also want to really connect it to how are they contributing to it. What does this mean for them in their jobs?

We've found that really helping to understand through focus groups or surveys, helping to understand what things employees really care about. Maybe that's part of your materiality assessment, ideally, but really understanding what employees care about and what topics really resonate with them. And then, building your story and your engagements around those.

Stewart Rassier:          

And Karl, when someone's thinking about engaging with their employees... essentially what you're trying to do is build awareness around ESG.

And that's quite honestly one of the biggest challenges and biggest gaps is people just don't know what a company's doing around ESG.

One of the biggest challenges and biggest gaps is people just don't know what a company's doing around ESG.

The second piece is building knowledge around that: building capabilities, understanding about the metrics, the significance of it to the business, like the internal business case of why we're focusing on this.

And then, the third piece to this is some type of behavior change, right? We're asking them to... I mean, it could be something as simple as turning off the lights in the building, right? Or turning off computers, or not booking that flight to Orlando. And instead of doing that as a Zoom call.

Those types of behavior change things. And, you can't ask people to do behavior without building awareness and creating education.

So, being very thoughtful in how you're putting that communications, and putting your programs, and what you offer is super important and super key. And then, the last thing which is related but slightly different is, we also have to reward our employees for being more involved in ESG.

And you're seeing a big push now for connecting ESG performance in your job to compensation, at the most senior level. But also, that ladders down into, "On my performance KPIs, do I have an ESG specific metric that I'm being measured to being held accountable for? And if I hit it, am I seeing some type of reward for that?" It could be a financial reward and performance.

But also, just there's non-financial things around recognition. Employee recognition, particular in ESG space is huge. So those are all considerations as you're engaging with your employees.

Karl Yeh:                    

And how often do you need to report back to the organization on the progress of your ESG program? Is it a quarterly thing, a weekly thing, an annual thing? I know you mentioned there is an impact report, or a CSR report, or ESG report at the end, but I'm sure the business, or the executives, or even the employees want to know like, "Hey, is everything that I'm doing actually working or achieving what we're trying to do?"

How often would you report on your ESG program progress?

Stewart Rassier:          

Yeah, no, Karl it's a great question. I mean, we'd love more of it and there's not enough of it. The joke in the space is that we put out an impact report, these different performance reports. And, we spend four to six months writing them. When we put it out and they're literally out of date the minute we publish it, right? Because, it's reporting on information that happened six months ago.

So, moving towards real-time data, more updates is going to help just better performance in the space.

We're not there yet. Organizations are creating dashboards that can provide the ladder up to the senior leaders, that can provide like, "Here's some key metrics for that." But I think one of the things that we're talking to more and more people about is the impact report or the ESG report, that's just one of many channels for communication around ESG.

And, if you want to attract and retain talent, if you want to improve your reputation, if you want to demonstrate that you're a company has purpose, then you need to identify what those audiences want to hear, and then figuring out ways, to Janna's point earlier, about to package it in a way that they're hearing it and seeing it on some type of regular cadence, because it's not their day job in ESG.

And they've got significant number of competing messages at them at any one point.

And, I'll always say to an ESG person, "It's not until you talk about your topic, or you talk about the performance of your volunteer program, or your foundation, or your carbon disclosure. It's about the time when you've gotten red in the face and you're ready to give up. That's usually the time when your peers and colleagues are actually paying attention."

So, yeah, really the communications piece to this is so key, because that's really how you get the business value around reputation and the business value around attracting and retaining talent. And now, those were their two main drivers for ESG and business value.

But now we're also seeing customers want to hear more about it and investors, Karl, to your point earlier, are wanting to hear more about this too. So, we need to be communicating more about these topics in more venues, and more places, and more channels, and significantly more often.

Karl Yeh:                      

Do you have any examples of organizations or businesses that have developed a successful ESG plan?

Examples of successful ESG plans

Janna Irons:                

Yeah. And I guess, to Stewart's point earlier, really having to meet employees where they are, and really go from awareness to knowledge then to behavior change.

We were working with, just for one example, a company with manufacturing facilities in the south. And, they had a really bold climate goal. And, they needed the people working in those facilities to be involved, right, to be able to reach that goal. And so, through focus groups, people just didn't understand emissions, or carbon, or what it all meant and why it mattered. And so, really having to go through the process of helping them understand the issue, be aware of what the company's doing, really build knowledge and understanding around the topic itself before we could then drive behavior.

And so, not just coming in and asking people to change, but really get them to understand why and to own it. And so, that was just one example of a really successful way that we've really helped to build around one specific topic, employee engagement, and really drive action and performance. And we know that this work not only helps to engage employees and feel like they are a part of something, that they're going to be loyal and have pride for where they work, but that, we also can use it to help drive performance on specific topics and actually achieve our goals by engaging employees.

Karl Yeh:                      

Now, do you have anything else to add in terms of developing an ESG strategy?

Stewart Rassier:          

No. I think for me, I mean, when I'm thinking about strategies, it's about choice and they have to make them. So, you definitely have to be making choice. And we spoke to this a little bit about making commitments.

So, whether it's commitments to the program and qualitative and quantitative goals, but that's often hard to do in year one, but that's definitely something that you're thinking about.

I talk about clarity and being very clear about what is included and what isn't. And, your strategy has to be actionable, so that if I'm sitting in HR, if I'm sitting in operations, I know what to do.

A very clear example of that was a handful of years ago, Starbucks focused specifically on the ethical sourcing of the coffee bean as their primary strategy and focus. And, it became very easy for decisions to be made within the organization from an ESG perspective, because they were primarily focused on that as a priority. And that's a great example of, there was some very clear, strategic thinking and direction that was put to the organization. And then, the last thing on strategy, which is hard to do, but the really good strategies tie back to specific capabilities, or talents, or unique product skills services that the organization has.

And a really good example of that is looking at an organization like Lyft, who used the cars and the technologies of getting a shared car service. And when they were thinking about their types of social impact programs, they used their technologies and worked with nonprofits to get individuals that didn't have access to vehicles or in low-income to their doctor's appointments, right?

So they used the technology that they had. That's something that not every company has, but like, "Hey, we have this unique capability, let's apply it to a social impact program." And, that laddered into a larger strategic implementation plan, which was unique, and special, and something that we could talk about.‍

Connect with Janna Irons

Connect with Stewart Rassier

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